Key takeaways:
Dogecoin whales are offloading significant amounts of DOGE, indicating a risk-averse sentiment.
Falling open interest and reduced daily active addresses point to a lack of demand for DOGE.
The rising wedge pattern for DOGE suggests a bearish reversal with a potential price drop of 45%.
Dogecoin (DOGE) has seen its price fall over 24% after reaching a multimonth high of $0.28 on July 21. Consequently, substantial holders of the memecoin have been selling off their DOGE during recent price declines, reflecting a lack of optimism regarding a rebound in the upcoming weeks.
Dogecoin on-chain metrics suggest further declines
Investor interest in DOGE remains low as evidenced by derivatives data. The futures open interest (OI) for Dogecoin has dropped to $3.24 billion from its peak of $5.35 billion on July 22. This 8% decline since Sunday suggests reduced speculative positioning, with fewer traders betting on short-term price increases.
DOGE OI (USD). Source: CoinGlass
Wallets holding between $10-$100 million in DOGE have decreased by 6% since late July, according to Santiment data.
Dogecoin supply distribution. Source: Santiment
This decline coincides with an earlier flagged transaction by Whale Alert, where 900 million DOGE, valued at over $200 million, was transferred to Binance by an unknown whale, raising worries about short-term selling pressure.
Generally, when large holders start offloading an asset amid declining prices, it indicates their anticipation of further declines.
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Additionally, the count of daily active addresses on the Dogecoin network has plummeted to 58,000, down from a peak of 1.65 million in Q4 2024 and 674,500 in July, signaling weak network activity.
DOGE Daily Active Addresses. Source: Glassnode
A reduction in active addresses suggests diminished user engagement on the network, potentially reflecting decreasing retail interest.
DOGE rising wedge pattern targets $0.12
From a technical standpoint, sell pressure on DOGE could intensify if it breaks beneath a rising wedge pattern.
A rising wedge is recognized as a bearish reversal chart pattern, featuring two converging trend lines that connect higher highs and higher lows, indicating a loss of bullish momentum.
DOGE is currently testing the support from the lower trendline of the wedge at $0.218.
If it falls below this level, it could trigger a more substantial price drop, with a technical target of $0.12, representing a 45% decrease from current valuations.
DOGE/USD daily chart. Source: Cointelegraph/TradingView
The relative strength index (RSI) further illustrates weakness, having dropped to 49 from overbought levels of 85 on July 20, signaling that bearish momentum is building.
As reported by Cointelegraph, DOGE must maintain above the $0.19-$0.20 range, along with the 100-day and 200-day moving averages, to avert further losses towards $0.16.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
